CHARTING INDICATORS: When In Doubt, Spend
27 Jan 17:13
By Stephen Cox, CMT
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--Maybe the U.S. is gradually morphing into one of those
troubled countries - Venezuela comes to mind - where the citizens buy anything
and everything that isn't denominated in the local currency. That's a gross
exaggeration, of course. But there's a good possibility that personal income
rose only slightly in December, while personal consumption rose more.
This week's economic paradox doesn't stop there. Consumer confidence, figured
for the month of January, is likely to have moved up above expectations. If
that happens, it will no doubt get a lot of attention. In fact consumer
confidence is going to have to beat consensus expectations in order to break a
long-term downtrend.
Durable goods orders during December will be released Tuesday at 8:30 a.m.
EST; the consensus of polled economists expects durable goods to be 0.6%
higher, after a 1.5% drop in November. December new home sales will be released
Tuesday at 10:00 a.m. EST; the consensus is looking for 1.025 million units,
down from 1.069 million in November. The Conference Board's closely followed
consumer confidence index, for January, will be released Tuesday at 10:00 a.m.
EST; the consensus expects the index to be 80.0, down from 80.3 for December.
The Q4 2002 advance gross domestic product will be released Thursday at 8:30
a.m. EST; the consensus expects it to be up 0.7%, compared to the Q3 2002 4.0%
increase. The 4Q 2002 employment cost index will be released Thursday at 8:30
a.m. EST; the consensus is looking for a 0.9% increase on the quarter.
Personal income during December will be released Friday at 8:30 a.m. EST; the
consensus expects it to be 0.2% higher than in November. Personal consumption
expenditures for December will be released Friday at 8:30 a.m. EST; the
consensus is calling for a 0.8% increase on the month.
Monthly durable goods orders have been under technical resistance since its
nearly three-year uptrend peaked in August. Although the indicator is likely to
have increased in December, the increase may not match the consensus
expectation. If so then durable goods orders will be up on 0.3%. The largest
increase in durable goods is likely to be 2.2% in case of a surprise.
On Monday, existing home sales came in at 5.86 million units, beating the
consensus expectation of 5.52 million. Later this week, new home sales may
repeat that strength.
In August, new home sales broke out of a bullish triangle formation, and the
implied upside target will probably be tested when December new home sales are
released this week. I look for sales to be between 1.111 million and 1.116
million, a new high for the 14-year uptrend. But if that happens the indicator
may have been set up for a dip during the remainder of this quarter.
Evidently a surprise December reading for The Conference Board's consumer
confidence index will take the index up to 87.3 or to the 89.2. The would be
considerably above the consensus expectation of 80.0, but it won't be good
enough for the economy. Consumer confidence will have to move above 89.2
resistance in order to mount an uptrend. But if consumer confidence doesn't
meet expectations then it will be 78.2 or lower.
If 4Q 2002 GDP comes in above expectations the outside high figure for 4Q
2992 GDP will be 3.0%, I estimate. However, observers shouldn't be surprise by
a 1.5% increase in GDP during the past quarter.
The chart practically agrees with the consensus on the 4Q 2002 employment
cost index. I estimate that the index will be up 0.7%, compared with the
consensus expectation a 0.8% increase on the quarter.
The consensus may be slightly low in its estimate of December personal
income. I estimate that personal income will be up 0.3% compared with the 0.2%
consensus expectation. The upward technical momentum of personal income has
flattened out during the past half-year. The indicator's rate of climb is
slowing in other words. That's often the sign of a slight dip. A
steady-to-lower December reading will confirm the possibility.
And if personal income rose only slightly in December then its notable that
personal consumption expenditures may be up 1.5% on the month if it beats the
consensus expectation.
For more technical analysis see: Dow Jones Newswires, N/DJTA; Telerate, page
4247; Bloomberg, NI DJTA; and Reuters key word search "Charting Markets."
-By Stephen Cox; Dow Jones Newswires, 201-938-2064;
stephen.cox@dowjones.com
(Stephen Cox, a chartered market technician, is chief technician for Dow
Jones Newswires.)
Data by Bridge/CRB
(END) Dow Jones Newswires
01-27-03 1713ET |
